C3 will allow you to use mp4 video, but we rely on the runtime environment ( chrome, firefox, NWJS, etc. ) to be able to play it. Some environments do not support it because it is a patent encumbered format, notably NWJS. Most major browsers support it though.
If your using the desktop build of C3; it's based on NWJS. So you won't be able to preview your video in it, but it can still make games with mp4 videos in using it.